C&S Wholesale Grocers has entered into an agreement in which it will acquire substantially all of Associated Wholesalers Inc.'s assets, including its White Rose distribution business. Under terms of the agreement, C&S will serve as the "stalking horse bidder" in a court-supervised auction process. Accordingly, the agreement is subject to higher and otherwise better offers, among other conditions.

To facilitate the transaction process and provide for an orderly sale, AWI and its subsidiaries, including White Rose, filed voluntary petitions for reorganization under Chapter 11 bankruptcy protection.

AWI and White Rose are expected to continue operating in the normal course during the sale process.

"We believe that the asset purchase agreement with C&S is in the best interest of AWI and its stakeholders," Joyce Fasula and Mike Rothwell, chairman and vice-chairman of the AWI board of directors, respectively, said in a press release. "After conducting a thorough process, which included the exploration of a range of alternatives and reaching out to multiple interested parties, we determined the best course of action for AWI was to enter this agreement with C&S and to undertake the court-supervised sale process."

"As we move through this transaction process, we will continue to focus on serving our customers," Matt Saunders, president and chief executive officer of AWI, said in the release. "We also intend to work closely with our suppliers and the winning bidder to help ensure that our customers continue to receive the level of service they expect."

"The addition of AWI and White Rose would expand C&S's footprint and enhance our significant capabilities in servicing independent grocers," Rick Cohen, chairman and CEO of C&S, said in the release. "AWI and White Rose have a terrific customer base, and their distribution capabilities are a natural complement to our existing portfolio. We believe we are strongly positioned to provide all of their customers with the goods and services they need to successfully run and even grow their businesses."

In conjunction with the proposed transaction, AWI has received a commitment for "debtor in possession" financing to support its continued operations during the pendency of the sale process. C&S has also made a commitment to participate in the "debtor in possession" financing package. AWI has filed a number of customary motions seeking court authorization to continue to support its business operations during the transaction process, including the continued payment of employee wages, salaries and health benefits without interruption. AWI has also asked for authority to continue existing customer programs and intends to pay suppliers in full under normal terms for goods and services provided after the filing date of Sept. 9.

The proposed transaction is subject to, among other things, higher and otherwise better offers to purchase any or substantially all of AWI's assets, court approval, antitrust approval, any other such approvals as may be required by law, and other customary conditions. Given these conditions, there can be no assurance that the proposed transaction will be consummated.